Podcast Interviews with Stock Compensation Experts

Bruce:

Although, the persons that you are interviewing may be sincere, I believe a dis-service to your viewers is done by promoting the idea that making early exercises of Employee Stock Options or SARs, selling the stock and diversifying has any merit. 

The penalties of forfeiting the "time value" back to the company and paying early state and federal compensation tax, which in some states exceed 50% will generally far outweigh any benefits of diversifying. This is especially true when the alleged diversifying consists merely of going in to mutual or index funds with the net proceeds.

Below is an article which clearly illustrates that the early exercise sell and diversify rarely has any merit.

 https://docs.google.com/presentation/d/1GLokFedzcAfHdqPYlA0FBbTmwXVYN2ckXRF_

LipwXs8/edit#slide=id.ga76fd315_8_19

Most Top executives of major companies hold their ESOs and SARs to near expiration, even where there is little or no "time value" remaining. And surely they probably get the best advice.

John Olagues

olagues@gmailcom